http://profitabletradingtips.com/stock-trading/beware-of-dark-pools Beware of Dark Pools The current debate about high frequency traders continues. Barclays, the United Kingdom based bank group is being taken to court by the New York state Attorney General. The State of New York alleges that Barclays falsified data about high frequency trader concentrations, used private customer information improperly and routed virtually every trading order through its dark pool first. The bottom line here is that regular traders and investors were pushed to the back of the line. No matter how good their technical analysis was they had to work harder for profits and to avoid losses because their orders who queued up behind high frequency traders. Traders and investors need to beware of dark pools where trades are hidden from the outside world and transparency does not exist. Dark Pools A dark pool is a trading network which allows traders to buy or sell large orders without transparency. An issue for someone who owns huge amounts of stock is that when they want to sell their sell orders are typically large enough that they drive the market price down. These folks like dark pools because no one else sees their order. However, this fragments the market. Imagine that you are looking for a house and want to know what prices have been selling for in your area. You are told that everything to the North, West and South of you is a dark pool of real estate. You have no idea what prices are being paid for homes and may end up paying way too much or selling your house for way too little. Dark pools fly in the face of the concept of efficient pricing and the efficient market hypothesis of the stock exchange. In our article about low volume trading we talked about the efficient market hypothesis and how this facilities fair pricing. Running Fast and Being Left Behind Not knowing what is going on in the trading room next door is one aspect of why you should beware of dark pools. The other reason to beware of dark pools is that those who run dark pools, like Barclays, have the bad habit of running all trades through the dark pool before regular traders see and have an opportunity act on them. This is in addition to the complaints about high speed and high frequency traders that they step in front of regular traders. No matter how hard a regular trader studies, evaluates the market and makes smart trades he or she is always second, or third or fourth in line.

1. By
www.ProfitableTradingTips.com
Beware of Dark Pools
Dark Pools: Beware of What You Cannot See!

2. http://profitabletradingtips.com/stock-
trading/beware-of-dark-pools
The current debate about high
frequency traders continues. Barclays,
the United Kingdom based bank group
is being taken to court by the New York
state Attorney General.

3. http://profitabletradingtips.com/stock-
trading/beware-of-dark-pools
The State of New York alleges that
Barclays falsified data about high
frequency trader concentrations, used
private customer information improperly
and routed virtually every trading order
through its dark pool first.

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5. http://profitabletradingtips.com/stock-
trading/beware-of-dark-pools
The bottom line here is that regular
traders and investors were pushed to
the back of the line.

6. http://profitabletradingtips.com/stock-
trading/beware-of-dark-pools
. No matter how good their technical
analysis was they had to work harder
for profits and to avoid losses because
their orders who queued up behind
high frequency traders.

7. http://profitabletradingtips.com/stock-
trading/beware-of-dark-pools
Traders and investors need to beware
of dark pools where trades are hidden
from the outside world and
transparency does not exist.

8. http://profitabletradingtips.com/stock-
trading/beware-of-dark-pools
Dark Pools

9. http://profitabletradingtips.com/stock-
trading/beware-of-dark-pools
A dark pool is a trading network which
allows traders to buy or sell large
orders without transparency.

10. http://profitabletradingtips.com/stock-
trading/beware-of-dark-pools
An issue for someone who owns huge
amounts of stock is that when they
want to sell their sell orders are
typically large enough that they drive
the market price down.

11. http://profitabletradingtips.com/stock-
trading/beware-of-dark-pools
These folks like dark pools because no
one else sees their order. However, this
fragments the market.

12. http://profitabletradingtips.com/stock-
trading/beware-of-dark-pools
Imagine that you are looking for a
house and want to know what prices
have been selling for in your area.

13. http://profitabletradingtips.com/stock-
trading/beware-of-dark-pools
You are told that everything to the
North, West and South of you is a dark
pool of real estate.

14. http://profitabletradingtips.com/stock-
trading/beware-of-dark-pools
You have no idea what prices are being
paid for homes and may end up paying
way too much or selling your house for
way too little.

15. http://profitabletradingtips.com/stock-
trading/beware-of-dark-pools
Dark pools fly in the face of the concept
of efficient pricing and the efficient
market hypothesis of the stock
exchange.

16. http://profitabletradingtips.com/stock-
trading/beware-of-dark-pools
In our article about low volume trading
we talked about the efficient market
hypothesis and how this facilities fair
pricing.

17. http://profitabletradingtips.com/stock-
trading/beware-of-dark-pools
Running Fast and
Being Left Behind

18. http://profitabletradingtips.com/stock-
trading/beware-of-dark-pools
Not knowing what is going on in the
trading room next door is one aspect of
why you should beware of dark pools.

19. http://profitabletradingtips.com/stock-
trading/beware-of-dark-pools
The other reason to beware of dark
pools is that those who run dark pools,
like Barclays, have the bad habit of
running all trades through the dark pool
before regular traders see and have an
opportunity act on them.

20. http://profitabletradingtips.com/stock-
trading/beware-of-dark-pools
This is in addition to the complaints
about high speed and high frequency
traders that they step in front of regular
traders.

21. http://profitabletradingtips.com/stock-
trading/beware-of-dark-pools
No matter how hard a regular trader
studies, evaluates the market and
makes smart trades he or she is always
second, or third or fourth in line

22. http://profitabletradingtips.com/stock-
trading/beware-of-dark-pools
For a long term investor who accurately
predicts that a stock will grow tenfold in
a decade it may not be necessary to
beware of dark pools.

23. http://profitabletradingtips.com/stock-
trading/beware-of-dark-pools
But for the trader who wants to scalp
profits from a volatile market the mere
presence of dark pools may result in
diminished profits or even losses.

24. http://profitabletradingtips.com/stock-
trading/beware-of-dark-pools
Also remember that a trader working in
a dark pool can also see the regular
markets.

25. http://profitabletradingtips.com/stock-
trading/beware-of-dark-pools
This he can place trades on the
NASDAQ or NYSE that will be
profitable once his huge trade in the
dark pool is completed and published.

26. http://profitabletradingtips.com/stock-
trading/beware-of-dark-pools
This can be a very profitable form or
arbitrage if a trader in a dark pool just
sold a huge block of stock in the pool
only to pick it up again in the regular
market after the price plummets

27. http://profitabletradingtips.com/stock-
trading/beware-of-dark-pools
In trading volatile stocks this can be
especially profitable.